If the board doesn’t keep the CEO in line—classic mistakes include value-destroying takeovers and expensive new corporate HQs—directors may be ousted. For the first dozen or so years after an IPO, corporate democracies and dictatorships tend to trade in line. The longer that high-profile companies with dual-class shares prosper, the harder it is to resist the idea that it isn’t a problem. One idea would be to demand robust sunset clauses on founder voting stock at the IPO. The U.K. has set its rules so institutional pre-IPO investors can’t keep extra voting shares for more than 10 years after an IPO.

Source: Wall Street Journal July 19, 2024 22:06 UTC